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Bitcoin’s value drops after a probe on UPbit

Bitcoin's value drops after a probe on upbit

Bitcoin’s value took a sharp road downhill after Upbit, largest digital currency exchange in Korea was charged with fraud by South Korean Prosecutors. The price of Bitcoin dived to 89.1 million won (US$80,000) at Bithumb on May 11 at 4:40 pm from $900 within an hour. Ethereum also saw its value drop from 80,000 won to 650,000 won. On an average, all the major digital currencies suffered a loss of 10{d433fa1c024495e3d30fb9a8ae174a80907308b9b8a5f0e72f30e7e693d34bc9} including Ripple, Litecoin and Bitcoin Cash.

Being the largest digital exchange in Korea and the fourth largest in the world, Upbit’s investigation had a negative impact on the prices of foreign virtual coins as well. The market capitalization of bitcoin came down to 158.597 trillion won (US$142 billion) from 270.7 trillion won (US$153 billion) at 5 pm on May 11’s midnight. The value of ethereum fell from 81 trillion won (US$72 billion) to 73 trillion won (US$65 billion).

Earlier this week, the prosecutors from South Korea probed Upbit for operating fraud transactions through its platform. They also confiscated accounting record add electrical hardware of the company for deeper investigation.

In an official statement posted on its website, Upbit said, “Upbit is currently under investigation by the prosecution, and we are working diligently. Upbit services such as all transactions and withdrawals are operating normally.”

It continued, “The company [Upbit] is suspected of transferring customer funds from their cryptocurrency exchange account to a representative or executive account…Korean prosecutors have conducted search and seizure against the nation’s largest cryptocurrency exchange, Upbit, on charges of fraud.”

More than ten investigators were sent by the Seoul Southern District public prosecutors’ office on May 10 and May 11 consecutively to secure important files and hard disks from the crypto exchange. The prosecutors have stated that the future of the investigation depends upon the confirmation of the charges. The team is conducting a thorough research to detect any instance of fraud or illegal activities in Upbit’s history.

To be specific, Upbit has been accused of duping customers of having a digital currency which it never had. It was carrying out book trading despite of having virtual coins in its wallet. In similar news, the chairman of Coinnest was arrested over charges of embezzlement, but Upbit has been spared of such allegations.

In a recent development, the investigation team has been joined by the Financial Supervisory Service (FSS) of South Korea. It will be assisting the Korean Financial Intelligence Unit (KIU) and Financial Services Commission (FSC) in the evaluation of Upbit and the current regulations over crypto exchanges.

Unlike Bitthumb, other crypto exchanges of the country are not publicly listed in a stock market which disallows anyone to see and audit their reports. It is believed that FSS will order crypto trading platforms to share their information with the local financial authorities or the government to stop encounters of fraud in future.

It would be interesting to see what step the regulatory authorities’ takes if Upbit is charged guilty of illegal activities. It could also ring the death bell for many other Korean exchanges.

About the author

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Paul Walsh

Paul is the creator and host of ‘The Coinversation’, a podcast that focuses on the developments of cryptocurrency, interviewing a wide range of experts and entrepreneurs as well as building upon the work of Bitcoin Chaser’s analysts. To know more about Paul, follow him on Twitter.

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